In March 2024, one year after establishing diplomatic relations, China and Honduras signed an economic cooperation agreement whereby the latter would receive a $280 million donation to improve the infrastructure and equipment of education centers around the country. The first disbursement was announced at the signing of the contract, but Honduran authorities say they don’t have access to the funds yet, and the Foreign Ministry’s transparency portal doesn’t provide additional information on the agreement – which was signed after the National Assembly passed a bill allowing negotiations, agreements and treaties ratified by the Honduran State to be conducted secretively.
Text: María Celeste Maradiaga
Photography: CC Archive
Honduras and China signed a $280 million (6.8 billion lempiras) economic agreement in late March of 2024. The funds, which are non-reimbursable, are destined for the infrastructure and equipment of schools around the country. During the signing of the agreement, an initial disbursement of 2.4 billion lempiras was announced.
The agreement, whose goal is to develop the project “Intervención Integral en Infraestructura y Equipamiento de Centros Educativos,” was signed by Honduras’ Foreign Minister Enrique Reina and China’s Ambassador to Honduras Yu Bo in the presence of third Vice President Renato Florentino, Minister of Education Daniel Sponda and Minister of the Honduran Social Investment Fund (FHIS) Warren Ochoa.
Although while signing the agreement a disbursement of 2.4 billion lempiras was announced, transparency portals from the Secretariat of Education (SEDUC) and FHIS don’t show relevant information corroborating this. Moreover, there is no copy of the agreement signed between China and Honduras or details of the dates for each phase.
In early March, Honduras’ official gazette announced the enactment of Decree 001-SG-2024, allowing talks about installing the International Commission against Corruption and Impunity (Comisión Internacional Contra la Corrupción e Impunidad – CICIH) to be conducted secretively, and declaring that “instruments, agreements and treaties” ratified by Honduras and any information concerning international organizations and other States are now confidential.
In December of last year, China provided humanitarian aid to Honduras in the form of a 2.48 billion-lempira donation for building homes in Valle de Sula and Valle de Quimistán, northern Honduras, aiding people who had been affected by tropical storms Eta and Iota in 2020. The funds were received by Secretary of Social Development José Carlos Cardona and Vice Chancellor Cindy Rodríguez, who also received 1.3 tons of flour from China for distribution in 56 municipalities nationwide through mayors’ offices.
Secretary of Planning Ricardo Salgado – who was invited to the ceremony commemorating the $280 million donation – said the funds have not been transferred to the State’s accounts yet.
The Honduran government decided to invest those funds in education instead of building “monumental works” like the National Library of El Salvador or the National Stadium in Costa Rica, he added.
“A decision was made to allocate the funds [China’s donation] for school infrastructure. China offers government loans like the Central American Bank for Economic Integration, the Inter-American Development Bank or the World Bank. We’ll submit the paperwork as soon as it’s completed and start working once the funds are released,” Salgado told Contracorriente.
Salgado also said he doesn’t know about the conditions of the agreement and prompted us to inquire with the Foreign Ministry and the Secretariat of Education.
Contracorriente tried to contact Warren Ochoa and Daniel Sponda to know more about the allocation of funds from China to improve school infrastructure, but as of publication they have not responded.
Cindy Rodríguez told Contracorriente that Foreign Ministry Advisor Mariam Tavassoli Zea could provide more information on mechanisms and transparency concerning the use of funds from China. However, interview requests to Tavassoli Zea went unanswered.
Prior to signing the agreement, the government had allotted more than 40 billion lempiras from the 2024 general budget to SEDUC. Of those, 1,786,329,329 lempiras were received from unspecified “external sources,” and the rest was sourced from the state treasury. Furthermore, SEDUC is among eight institutions to which 78 percent of the 2024 general budget was allotted.
In the case of FHIS, 67.1 percent of funds allotted to it in 2024 came from agreements, donations or projects not disclosed in the general budget.
FHIS oversees several infrastructure projects in the public sector which are financed by the Inter-American Development Bank (IDB), the World Bank and USAID. There are two active project in the education sector: (1) Mejoramiento Integral de la Infraestructura y Formación Educativa en Honduras (Mife), which is financed by the Central American Bank for Economic Integration (BCIE) and will conclude in 2026, (2) Programa de Mejora de la Infraestructura Escolar (Promine), which is financed by Germany and will conclude in July of this year.
A total of 311.9 million lempiras had been budgeted for those two projects in 2024. However, no funds have been used so far this year, according to the transparency portal.
When asked which institution is responsible for using funds from China to improve school infrastructure, Salgado said FHIS will use the funds as soon as they are released. “Every penny” will have to be accounted for, and expenses will be available on the portal, he added.
According to Salgado, although the Secretariat of Planning did not have a specific role in the agreement, it is part of the cabinet overseeing investments, and it will be able to “attest to the completion of projects in accordance with goals and time frames.”
Miguel Gomis, PhD in political science and professor at the Pontificia Universidad Javeriana in Bogota, says a million-lempira donation from China is a response to the government’s need to address the demands of Hondurans, and showcases China’s ability to offer loans, which it had not made available to Honduras before.
However, Gomis stressed that an investment in school infrastructure is not necessarily in line with policies that improve the quality of education in Honduras.
According to the 2023 Estado de País report by Asociación para una Sociedad más Justa (ASJ), Honduras is still facing high levels of educational exclusion in pre- and secondary school, considering that enrollments in schools dropped 0.3 percent between 2022 and 2023, and Honduras has not agreed to international education evaluations since 2019.
Data from the report also reveal that Honduras did not succeed in investing 6 percent of its Gross Domestic Product (GDP), as recommended by the United Nations Educational, Scientific and Cultural Organization (UNESCO), in 2023, and funds destined for textbooks decreased by 1.9 million lempiras that year.
On the other hand, Hondurans polled by Equipo de Reflexión, Investigación y Comunicación (ERIC-SJ) say improvements in education and health care should be among the Castro administration’s top priorities. The poll also revealed that the Secretariat of Education is the third most trusted institution after the evangelical and catholic churches.
“China is offering pragmatism, which is what the Foreign Minister [Enrique Reina] said: ‘Diplomatic relations with China are not ideological but pragmatic,’ that is, what matters is receiving help to rapidly develop the country because they’re under pressure to show results,” Gomis said.
According to data from the Secretariat of Education, 1,415 education centers were repaired nationwide in 2023. Most repairs were made in the departments of El Paraíso, 241, Francisco Morazán, 206, and Santa Bárbara, 176. Departments with the least number of repairs were Valle, 0, Islas de la Bahía, 6, Ocotepeque, 6, and Cortés, 11.
Only 483 education centers were rebuilt in 2023: 83 in the Santa Bárbara department, 59 in Intibucá and 45 in Comayagua, while no education centers were rebuilt in Atlántida and Olancho that year, according to SEDUC.
“The study shows a preference for repairs over full reconstruction of schools. This is probably due to costs, time and viability of repairs,” SEDUC’s 2023 annual report says.
The report also states that funds for repairing and rebuilding schools come from local governments, NGOs, FHIS and “several companies and foundations” in addition to SEDUC – all of which take part in financing and carrying out projects.
According to FHIS’s last quarterly report of 2023, more than 195 million lempiras were expended on 50 projects to repair and renovate school infrastructure that year. Data from FHIS indicate that 83,573,567 lempiras were expended on 25 smaller projects to restore, repair and expand education centers as part of works that had begun in November 2022; 63,387,572 lempiras on 17 smaller projects which began in the first trimester of 2023; and 48,900,577 lempiras on 8 smaller projects in the last trimester of that year.
Corruption surrounding donations and lack of transparency
Gomis says there are no clear mechanisms for expending and keeping track of funds, and delays in creating the International Commission against Impunity in Honduras (Comisión Internacional contra la Impunidad en Honduras – CICIH) arouses concerns about the use of funds and external financing.
“How do we track those funds? Will the public have access to information concerning biddings? It is customary to ensure that procedures to expend the funds are in place while overseeing biddings, but, as far as I know, China hasn’t demanded such mechanisms from other countries,” Gomis said.
In March of this year, the Honduran government issued a decree rendering negotiations between the State and the United Nations to install the CICIH in Honduras confidential, which caused concern among civil society and sectors who support the commission.
But before establishing diplomatic relations with China, when Honduras had diplomatic and commercial relations with Taiwan, there was also corruption and lack of transparency surrounding donations.
During the COVID-19 pandemic, Taiwan donated $2,414,300 to Honduras to address the health emergency in 2020. But the Permanent Contingency Commission (Comisión Permanente de Contingencias – COPECO) only accounted for $414,840, which were used to provide accommodations and cover food expenses for a Cuban medical brigade, and manufacture surgical gowns.
In addition, Taiwan – no longer a diplomatic ally since Honduras severed ties in favor of China – along with the U.S., South Korea and the Latin American Business Council (Consejo Empresarial de América Latina) donated more than two million surgical masks and biosecurity equipment in response to the pandemic, but COPECO did not account for those donations either.
In 2018, the Mission Against Corruption and Impunity in Honduras and the Special Prosecution Unit Against Impunity for Corruption (UFECIC) – now called Specialized Prosecutor’s Unit Against Corruption (UFERCO) – unveiled the case “Caja chica de la dama,” revealing the involvement of the former First Lady Rosa Elena Bonilla in the coordination of a corruption network that embezzled 94.6 million lempiras. The funds had been donated by several sources, including the Taiwanese embassy, but should have been expended by the Unit of Community Development (UDECO) between 2011 and 2014.
According to a study by AidData, China saw the completion of about 3,427 projects worth $843 billion in 165 countries, within the framework of loans and aid, between 2000 and 2017.
In the investigation, Beijing’s external financing was analyzed, including the Belt and Road Initiative (BRI), a global infrastructure plan launched by Xi Jinping in 2013 to strengthen China’s presence in international trade versus the U.S.
Gomis says Honduras is not a key trading partner of China, but diplomatic relations with an Asian country do have a great significance.
Making headway at the macroeconomic level in the midst of a polarized discourse
In the most recent round of negotiations, China and Honduras discussed the easing of tariff protections and the exportation of coffee, tobacco, melon, seafood and sugar.
Although advances have been made on the economic agreement, with 23 of the 25 key points defined, the resulting macroeconomic growth could be marred by the government’s polarized discourse.
According to the report Situation of Human Rights in Honduras by the Inter-American Court of Human Rights (IACHR), recent governability crises in Honduras “have generated an atmosphere of social polarization, obstructing democratic consensus on decision-making and the implementation of measures to strengthen institutions.” The report also highlights the lack of mechanisms to allow citizen participation in governance.
“By definition, populism consists of appealing to the people and usually proceeding with disintermediation. Cooperating with China speeds up projects and yields results much faster. One of the goals set by the government is to revitalize the economy at the macro level,” said Gomis and asked, “But is this path viable?”
Rixi Moncada, former secretary of finance, is a presidential candidate endorsed by President Castro’s family. She was a member of the commission that negotiated the installation of CICIH. Although Moncada has not announced policy initiatives and her position on Honduras-China relations, her supporters say she will boost projects launched by Castro.
“Rixi Moncada is the only one who can guarantee a path forward, ensuring that projects continue and moving toward a refoundation of the country,” said Carlos Zelaya, congressional representative from the LIBRE party, while presenting Moncada at a rally in April of this year.
